Case #5387

(10/25/11)

COASTAL CONTACTS, INC. Coastal Contacts, Inc. Advertising

Challenger: 1-800 Contacts, Inc.

Free claims must clearly and conspicuously disclose, at the outset of the offer, the material terms and conditions of the offer in close conjunction with the free merchandise claim. The display of likes on Facebook and other social platforms may reasonably be understood by consumers as conveying a message of general social endorsement.

Basis of Inquiry: Claims made on the Internet by Coastal Contacts, Inc. (Coastal or advertiser) were challenged by 1-800 Contacts, Inc. (1-800 Contacts or challenger). The following claims served as the basis for this inquiry: Express Claims: Like This Page! So you too can get your free pair of glasses! Save 70% and Get Fast, Free Shipping! Save over 70% on Contact Lenses. Save Over 70% Off Weekly Contacts. Contact Lens Coupon Save on Brand-Name Lenses Save 70% & Get Fast, Free Shipping! Contact Lens Save Over 70% Off Weekly Contacts Get Free Shipping on Your Order The advertisers manufacturer suggested retail price (MSRP) claims. In addition, 1-800 Contacts challenged the advertisers consumer endorsements. Specifically, 1800 Contacts challenged the advertisers references to the number of people on Facebook that have liked the Coastal Contacts Facebook page (for example, 294,033 people like this) as well as the process through which the advertiser has obtained such consumer endorsements.

Challengers Position: As a preliminary matter, the challenger explained that while it is aware that Coastal has agreed to modify its advertising claims and practices, the challenger believes these modifications fail to adequately remedy the false, deceptive, and misleading claims and practices outlined in its initial complaint. Additionally, because Coastals advertising modifications occurred only after the

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initiation of a formal challenge, the challenger contended that NAD should, in accordance with NAD procedures and past precedent, review the challenged claims on the merits.1 I. False and Misleading Free Claims A. Coastals Claims at the Time of the Complaint The challenger stated that, at the time of the Complaint, Coastals Facebook page included prominent claims for free eyeglasses, but failed to include any qualifying language explaining the conditions and obligations upon which the free claims were contingent. In particular, the challenger asserted that Coastals offer of a free pair of eyeglasses to customers who like the Coastal Facebook page failed to include (at the outset of the offer) the following material disclosures: 1) the existence of the additional shipping and handling costs that a consumer is obligated to pay in order take advantage of the advertised free offer; 2) the fact that not all styles of its eyeglass frames are eligible for the advertised free offer; and 3) the fact that not all types of lenses are eligible for the advertised free offer. According to the challenger, Coastal does not deny that customers receiving free glasses are actually charged shipping and handling fees, that the offer applies only to a limited assortment of eyeglass frames (while others are excluded from the promotion), or that customers are charged for an upgrade if they select eyeglass lenses other than a standard 1.5 index lens.2 The challenger further emphasized that Coastal also does not assert that the qualifying disclosures were clearly and prominently available at the outset of the advertised free offer.3 B. Coastals Efforts are Insufficient to Clarify its Misleading Free Claim The challenger noted that, without admitting that its free glasses offer is false or misleading, but also without providing meaningful support in defense of its past practices, Coastal has agreed to modify its Facebook free glasses offer by adding a fine print disclosure at the bottom of the initial offer page with the following qualifying language: Offer valid daily starting at 9:00 am EST or until 10,000 glasses have been given away. Standard 1.5 index lenses included. Lens upgrades, shipping and handling extra. Coupon eligible frames only. Valid for first time free glasses recipients only. Limit one per household.

See General Mills, Inc. (Progresso Soup), Case #4838, NAD/CARU Case Reports (April 2008). (In order to deprive NAD of jurisdiction pursuant to Section 2.2B(i)(d) of the NAD/NARB Procedures, the advertising must have been permanently discontinued prior to the commencement of the challenge and the advertiser must assure NAD, in writing, that the challenged claims will not be made in future advertising.) 2 In addition, the challenger argued that despite Coastals assertion that an FAQ section (containing some of the qualifying conditions of the free offer) was displayed below the initial free offer on Coastals Facebook homepage, the initial offer page did not contain any FAQs at the time this inquiry was opened. 3 The challenger stated that its initial complaint noted that certain conditions were disclosed to consumers at various points after the initial free offer on the Facebook homepage. However, these disclosures were not available to customers until after customers clicked the Facebook like button and were directed to a subsequent web page.

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It is the position of the challenger that this disclosure is neither clear nor prominent enough to overcome the misleading nature of the primary free advertising claim. The challenger further argued that the disclosure contradicts the primary free advertising claim because all customers must pay substantial shipping and handling charges, and no glasses are given away. The challenger noted that both NAD and the FTC have emphasized the importance of clear and prominent disclosures stating that when disclosure of qualifying information is necessary to prevent advertising claims from being deceptive, that information should be presented clearly and prominently so that it is actually noticed and understood by consumers.4 In particular, the challenger noted that NAD considers the following factors in evaluating the effectiveness of disclosures: 1) the prominence of the qualifying information, especially in comparison to the advertising representation itself; 2) the proximity and placement of the qualifying information vis--vis the representations that it modifies; 3) the absence of distracting elements such as text, graphics, or sound that may distract a consumers attention away from the disclosure; and, 4) the clarity and understandability of the text of the disclosure.5 The challenger argued that, when considered in light of these factors, Coastals new qualifying disclosure is clearly inadequate. First, the challenger asserted that the small type disclosure cannot be considered prominent, particularly as compared to the exceptionally large claim for free glasses. The disclosure text is many times smaller than the free offer text, and may fairly be considered to be mousetype.6 Second, the challenger asserted that the disclosure is not in close proximity to the free offer. The free offer is located at the top center of the Coastal Facebook page, while the disclosure is located at the bottom of the page and may, depending on screen size and settings, require scrolling to be seen. Third, the challenger asserted that the free offer which appears in an oversized, bold, colored, capitalized type calls attention to itself in such a way as to distract from the very small disclosure in plain black text.

See The Dannon Company (Dannon Light & Fit 0% Plus Yogurt), Case #4953, NAD/CARU Case Reports (January 2009) (citations omitted). 5 See id. 6 The challenger asserted that NAD has frequently expressed concern over the appearance of mouse-type disclosures. See ALLTEL Communications, Inc. (Wireless Telephone Service), Case #3928, NAD/CARU Case Reports (June 2002) and VOICESTREAM WIRELESS (Wireless Telephone Service), Case #3714, NAD/CARU Case Reports (December 2000) (NAD, as well as the [FTC], has recognized that mice type disclosures at the bottom of a full page newspaper advertisement will not, as a general rule, be sufficient to disclose material information.). See also, FCC/FTC Joint Policy Statement for the Advertising of Dial-Around and other Long Distance Services to Consumers (A fine print disclosure at the bottom of a print ad . . . is not likely to be effective.).

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Fourth, the challenger asserted that the language of the disclosure is unclear and difficult to understand. For example, the challenger stated that the disclosure combines information regarding separate additional charges into a single statement (lens upgrades, shipping and handling extra) giving the impression that there is only one additional extra charge. Fifth, the challenger argued that even if the free offer applies to certain designer frames, such inclusions do not excuse Coastals failure to clearly disclose, at the outset, that the offer applies only to a limited assortment of frames sold by Coastal. Finally, the challenger argued that Coastal has provided no support for the proposition that customers know that stronger prescriptions require thicker lenses, and, that customers will automatically understand that the free glasses will include a charge for upgraded (thinner) lenses.7 The challenger argued that, at a minimum, Coastals initial disclosure should, in addition to stating Standard 1.5 index lenses included, inform customers that non-standard lenses to which additional charges will apply may be automatically selected as part of the ordering process. The challenger argued that the automatic selection of a higher quality eyeglass lenses should trigger an express disclosure informing customers that they will be charged for such lenses unless they change the selection to the free standard lens option. II. Fraudulent Inducement of Customer Endorsements

According to the challenger, while the free eyeglasses claim is false and misleading for failure to make the material disclosures at the outset of the offer, the offer also fraudulently induces consumers to like the Coastal Facebook page in order to obtain the free glasses, resulting in widespread social media marketing and promotion premised upon false pretenses. The challenger further argued that, in a social media context, these fraudulently obtained endorsements perpetuate the misleading suggestion that Coastal enjoys broader support than it would actually have in the absence of its misleading free promotion. The challenger explained that every time an individual likes Coastal on Facebook, all of that individuals Facebook friends are shown the endorsement of Coastal by someone they know. Additionally, the challenger asserted that the number of Facebook likes are observed by viewers as a form of general endorsement. However, the challenger noted, none of the Facebook users who observe this information are informed that a significant portion of these like endorsements are prompted by a yet-to-be-fulfilled, misleading offer of free merchandise. Similarly, the challenger emphasized that Coastal has issued press statements reporting the number of likes it has to the investor community and others without disclosing the role played by the misleading offer of free merchandise in generating these likes. The challenger argued
The challenger stated that the disclosure does not indicate that non-standard lenses to which additional charges will apply may be automatically selected as part of the ordering process. In fact, the challenger stated, non-standard lenses may even be required in certain frames based on the amount and type of vision correction the customer requires.
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that obtaining and promoting Facebook likes is an extremely valuable promotional tool and should not be done in a misleading way. According to the challenger, Coastal does not deny that it obtained like endorsements as a result of the free glasses offer. In addition, the challenger contended that Coastal does not argue that these likes were not induced by a misleading free claim. Rather, the challenger argued, Coastal seeks to excuse its fraudulent inducement of these offers by arguing that not all of its like endorsements are the result of the free offer. The challenger explained that it does not argue that all of Coastals likes are a result of the misleading free offer, but rather, that a significant portion of these like endorsements are prompted by a yet-to-be-fulfilled, misleading offer of free merchandise. Moreover, the challenger stated that it stands to reason that many thousands of Coastals Facebook likes have resulted from consumers seeking free eyeglasses as part of a deceptive promotion that appears to have been run at least weekly for many months. In response to Coastals point that many retailers invite consumers to like their Facebook pages to obtain access to coupons, deals, exclusives, bonuses, or early access to merchandise, the challenger stated that Coastal fails to recognize that 1-800 Contacts is not asserting that the inducement of a like endorsement is inappropriate. Rather, the challengers position is that the fraudulent inducement of such an endorsement based on a misleading promotional offer is a deceptive or misleading practice. The challenger went on to state that Coastals fraudulent inducement continues to be a concern, despite the inclusion of the qualifying disclosure for the free glasses promotion discussed above. It is the position of the challenger that Coastals remedial disclosure is inadequate because it fails to clearly and prominently provide the qualifying information necessary to prevent Coastals advertising claims from being deceptive. Consequently, the challenger argued that the like endorsements prompted by the free glasses offer continue to be fraudulently induced. For these reasons the challenger contended that, in addition to modifying its qualifying disclosure, Coastal should be required to review its records to determine which like endorsements were obtained as a result of the free glasses offer and, thus, obtained under false pretenses. The challenger argued that these fraudulently obtained like endorsements should then be removed. The challenger further argued that if Coastal is unable to make this determination for each consumer like, then to cure its misleading practices Coastal should be required to remove all of the like endorsements received since the introduction of the Facebook free glasses promotion. III. Deceptive Pricing Claims

The challenger stated that, at the time of the Complaint, Coastal was making a variety of deceptive pricing claims, including claims offering contact lenses at a savings of 70% or more and publishing a fictitious MSRP for its private label eyeglasses.

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A. Discounted Pricing of 70% or More It is the position of the challenger that Coastals claims offering discounts of 70% or more lead consumers to believe that they can obtain contact lenses from Coastal for at least 70% less than a higher price that the consumers would typically pay for the same contact lenses obtained elsewhere. The challenger stated that it does not believe that Coastals contact lens prices are 70%, or more, below the contact lens prices typically available to consumers, even for contact lenses purchased in a doctors office. The challenger emphasized that Coastal has not provided any information regarding the actual contact lens prices upon which the 70% or more savings claim is based. In addition, the challenger noted that in response to the complaint, Coastal alleged that [i]t would be impossible or burdensome for it to provide actual sales prices for every single contact lens available through other retail establishments. The challenger argued that, in effect, Coastal is stating that it would be impossible or burdensome to substantiate its discount pricing claim. However, the difficulty of providing required support does not relieve an advertiser of its obligation to substantiate its claims. Thus, the challenger asserted that Coastal should either provide NAD with adequate support for this discounted price claim, or, in the case that Coastal has not done the analysis, or cannot provide the required support, Coastal should not make the discounted price claim. B. Discounts Up to 70% In response to Coastals statement that it has changed its discounted pricing claim from more than 70% to Up to 70%, in an effort to follow standard industry practice, the challenger argued that whether or not an Up to 70% claim is considered standard industry practice, Coastal must still provide support for its discounted pricing claim. The challenger argued that the evidence provided by Coastal Contacts in support of the modified Up to 70% off claim is both flawed and insufficient. According to the challenger, the data submitted in Coastals Price Comparison Chart and Revised Price Comparison Chart fails to support the modified discount pricing claim of Up to 70% in two key respects. First, the discount percentages were calculated incorrectly. Second, the comparison pricing data is not drawn from a truly representative sample of competitors. 1. Incorrect Calculation of Discount Percentages The challenger contended that Coastal calculated the percentages stated in its Price Comparison Chart incorrectly. According to the challenger, Coastals miscalculations are immediately obvious upon the observation that, in some cases, Coastal claims that the price discount is more than 100%. Coastals incorrect calculations can be demonstrated by using the prices listed in the Price Comparison Chart for the largest price difference shown. For example, the Price Comparison Chart compares Coastals price for Air Optix Aqua Night and Day contacts with

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the Site for Sore Eyes (SSE) price for the same product (asserting that the Coastal price is 160.57% off the SSE price). The challenger stated that SSE charges $130.00 for this product while Coastal charges $49.89. Thus, Coastals price is $80.11 off of SSEs price. In order to determine the percentage of the discount from the competitors price (the percent off), the amount of the discount, $80.11, must be divided by the price from which it was subtracted, $130.00; 80.11 divided by 130 is .616 or 61.6%. Accordingly, the challenger stated that contrary to Coastals chart, which states that Coastal provides a discount of 160.57% for this product, the discount is actually 61.6% off of the competitors price, well below 70%. The challenger further stated that after correcting the calculations in the advertisers Price Comparison Chart none of the price comparisons identified by Coastal demonstrate an instance where Coastals price is 70% less than the price charged by the listed competitor. In particular, the challenger noted that when calculated correctly, the few price discounts that purport to be 70% off or more in the Coastal Price Comparison Chart are actually in the 50% off range, and, the majority of the discounts demonstrated in the chart are far below that not even approaching 50% off. 2. The Price Comparison Chart is Not a Representative Sample of National Contact Lens Prices In addition to arguing that the price comparisons were calculated incorrectly, the challenger further noted that the largest discounts identified in Coastals Price Comparison Chart (as well as most of the smaller discounts) all pertain to products from niche retailers with a very small market share. The challenger contended that, as an online retailer selling contact lenses to a national audience, Coastals price comparison claims should be based on prices of competitors (both online and brick-and-mortar) that represent a substantial portion of the national market share. Only by comparing against the most prominent retailers can Coastals comparison accurately represent the prices that a substantial number of consumers can typically expect to pay elsewhere for contact lenses. Price comparisons should not be based upon skewed data, where favorable prices are cherry-picked to ensure more favorable comparisons. The challenger stated that, with the exception of LensCrafters, the Price Comparison Chart only compares Coastals prices against the prices of retailers with a small percentage of the national market share, retailers serving atypically expensive urban markets, and retailers with relatively few locations.8 According to the challenger, data from the Vision Monday (VM) Optical
The challenger provided the following examples: 1.) Grand Central Optical in New York City, has only two locations and is located in a very expensive market. The challenger stated that although Grand Central Optical does sell contacts online, it should not be recognized as a competitor for general price comparison claims based on small market share and lack of national presence; 2) Alamo Eye Care in San Antonio Texas has only three locations and no online sales presence; 3) Cohens Fashion Optical has more locations than most of the other companies identified on the Price Comparison Chart (approximately 100 according to the companys website), but it is actually only located in seven eastern states and Puerto Rico, not all over the states as represented by Coastal; and 4) Site for Sore Eyes has 38 stores located in the San Francisco area an atypically expensive market.
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Retailer Report demonstrates that there are numerous retailers of optical products with a significantly greater national presence than the outlets Coastal elected for its limited comparison. In particular, the challenger stated that Coastal neglected to compare prices against most of the leading optical retailer brands identified by VM based on U.S. sales, including Pearle Vision, Sears Optical, Americas Best Contacts and Eyeglasses, JC Penney Optical, For Eyes Optical, and others. In fact, the challenger stated, the VM report identified at least eight optical retail brands with more locations than all of the competitors chosen by Coastal for the Price Comparison Chart, with the exception of LensCrafters. The challenger contended that prices charged by these national retailers and market leaders are most likely to represent prices actually charged to a substantial number of consumers. The challenger argued that for online and national retailers such as Coastal, price comparison claims should be based on data from routine and ongoing price gathering activities. These activities should obtain information on a rotating, randomized basis from all market leading retailers, as well as trended averages of pricing information from a large and geographically diverse sample of independent optometrists, who collectively represent the biggest group of optical product retailers. In support of its position, the challenger submitted market share information and sales figures for the top five U.S. optical retailers as well as the market share and sales figures for both 1-800 Contacts and Coastal. The challenger further noted that publicly available sales data for Coastal indicates a significant increase in the sales of eyeglasses since the fourth quarter of 2010, with an especially noticeable increase in the second quarter of 2011. Based on Coastals statement that the Facebook Free Glasses promotion began sometime in late 2010 the challenger contended that this increase in sales and market share may be attributable to Coastals unfair and deceptive promotional practices at issue in this challenge. C. MSRP for Private Label Eyeglasses The challenger asserted that, at the time of the complaint, Coastal published a fictitious MSRP for its private label eyeglasses available only through Coastal even though the price for these glasses is set by Coastal and no consumers appear to be charged the MSRP. The challenger argued that posting a false MSRP causes consumers to perceive savings where none exist and when, in fact, they are paying the typical price for the private label glasses. It is the position of the challenger that Coastal has provided no evidence supporting the validity of the MSRP. Instead, revealing an understanding of the deceptive nature of listing an MSRP that is never actually charged, Coastal has decided that it will no longer post the MSRP for its private label glasses. For the reasons stated above, the challenger requested that NADs decision recognize the deceptive nature of this practice.

Advertisers Position:

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As a preliminary matter, the advertiser stated that it has completely discontinued its use of an MSRP for its private label brand glasses and made significant changes to its free glasses promotion as well as its more than 70% off claim. In addition, Coastal confirmed that it will not use an MSRP with its private label glasses again in the future, and, that it will not run the promotions in their originally challenged form. It is the position of the advertiser that, rather than acknowledge that the changes made to the challenged advertising claims are sufficient, 1-800 Contacts continues its long-standing practice of harassment and anti-competitive behavior under the guise of cleaning the market of deceptive practices. In particular, the advertiser asserted that because 1-800 Contacts has just recently entered the on-line prescription glasses business it is playing a game of catch-up by doing whatever it can to disrupt the business of its competitors, including Coastal. I. The Modified Free Glasses Promotion

The advertiser explained that it has modified its Free Glasses promotion to prominently include all qualifying information as part of the advertisement. According to the advertiser, the qualifying information is now included regardless of where or how the consumer accesses the promotion. Thus, the qualifying information is clearly available to the consumer before it likes Coastals Facebook page. In response to the challengers argument that the qualifying information is still insufficient, the advertiser noted that the promotion at issue in this proceeding takes up no more than one-half of the screen and the qualifying language is viewable without scrolling in all but the smallest of handheld devices. In addition, the advertiser stated that, given the size of the advertisement, the qualifying language is sufficiently close to the free offer despite the fact that it is at the bottom of the advertisement. The advertiser noted that the qualifying language appears in black text on a white background, making it stand out against the blue background of the rest of the promotion. Further, the advertiser argued that not only is the qualifying language standard, but it is completely clear: lens upgrades, shipping and handling extra.9 With respect to the challengers issues with the fact that a recommendation of non-standard lenses for certain prescriptions occurs during the selection process, the advertiser asserted that no one is deceived by this aspect of the promotion. To support its position that there is nothing misleading or deceptive about this aspect of the promotion the advertiser submitted a sample of comments and reviews demonstrating that consumers are universally happy with the free glasses promotion even those that did not select standard lenses.

The advertiser noted that 1-800 Contacts urges NAD to require Coastal to state the amount of shipping and handling charges in the qualifying language. The advertiser argued that there is no basis for this requirement. According to the advertiser, consumers are accustomed to learning shipping and handling charges during the ordering process as they are typically dependent upon where the goods are being shipped and their weight or total price.

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The advertiser further contended that the challengers argument completely ignores the real world vagaries of prescription eye glasses and the fact that when the time comes for the consumer to make the lens selection, the consumer has multiple opportunities to select standard lenses if it chooses. In addition, consumers are given advice and instructions on selecting the proper lens for the prescription as well as clear notice of all charges related to the selection of non-standard lenses. Finally, the advertiser emphasized that the consumer is clearly notified upfront in the qualifying language that there will be additional charges if non-standard lenses are selected. II. Coastals Facebook Likes

The advertiser similarly rejected the challengers argument that the original Coastal Free Glasses promotion fraudulently induced consumers to like Coastal on Facebook as well as the challengers argument that Coastals posting or advertising of the number of likes it has received is deceptive.10 First, Coastal asserted that fraud is a criminal offense and nothing done by Coastal or even alleged by 1-800 Contacts rises to the level of a criminal offense. According to the advertiser, fraud or fraudulent inducement require specific elements, including the objective intent to deceive11 which are completely contrary to Coastals business policies. The advertiser stated that it was never Coastals intent to deceive consumers and, importantly, all available evidence points to the fact that consumers were not deceived by Coastals original Free Glasses promotion. As detailed above, Coastal has revised its Free Glasses promotion to make the disclosures earlier and more prominent. Second, Coastal asserted that it does not overstate the number of likes it has received from consumers, and, there is no reason to remove the likes obtained through the original Free Glasses promotion. The advertiser stated that 1-800 Contacts position implies that consumers who liked Coastals Facebook page based on the original Free Glasses promotion would not have liked Coastal had they been informed of the terms and conditions of the promotion at the outset. This position, the advertiser argued, is not supported by any evidence and is nothing more than conjecture. Coastal freely acknowledges that it received likes from consumers exposed to the original Free Glasses promotion and that it cannot differentiate those likes from other likes it has received. Nonetheless, the advertiser argued that there is no reason to assume that the consumers
The advertiser noted that, presumably, 1-800 Contacts position is unchanged with respect to Facebook likes received after Coastal modified the Free Glasses promotion. 1-800 Contacts has argued that Coastals modifications to the promotion are insufficient because some consumer may have to scroll down their computer screen to see them and because the terms and conditions are unclear. Coastal asserted that its terms and conditions use standard industry language concerning shipping and additional costs adding that the language and placement of the terms and conditions fully comply with all applicable regulations. Finally, Coastal stated that to the extent that the modifications made are not sufficient, any deficiencies are de minimis. 11 The advertiser noted that a party that commits fraud induces and receives payment from another party who expects specific goods or services in return. Here, a consumer who indicates on Facebook that they like Coastal neither pays any money nor expects anything in return.
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that liked Coastals Facebook page due to the original promotion would not have liked Coastal had the terms and conditions of the promotion been brought to their attention prior to their liking Coastal on Facebook. In fact, the advertiser argued that all evidence points to the contrary. The advertiser stated that the many favorable comments received from consumers who took advantage of the Free Glasses promotion makes it extremely unlikely that these same consumers would not like Coastal had they been exposed to the terms and conditions earlier or in a more prominent fashion. The advertiser further noted that there is nothing stopping those same consumes from taking back their like if, upon review of the terms and conditions, they felt differently about Coastal, particularly in the case where a customer liked Coastal and did not end up obtaining one of the free pairs of glasses available. The advertiser argued that the fact that these customers do not take back their like is a testament to the strong relationship Coastal has with its customers. In addition, the advertiser stated that the terms and conditions of the promotion were always included in the FAQ section, which consumers frequently review. Thus, Coastal asserted that even if consumers did not see the terms and conditions before they liked Coastal, it is likely that many were exposed to the FAQs before deciding to like Coastal. It is Coastals position that, absent a proper survey or other evidence, there is no reason to believe that Coastals likes have been overstated to any significant extent because of the Free Glasses promotion. Moreover, Coastal argued that there is no evidence demonstrating that the number of likes is material to a consumers decision to purchase products from Coastal. Coastal contended that while the number of likes a company has on Facebook might generate buzz on social networks, in the same way that an attractive model creates buzz, it is not the kind of information consumers typically rely on in making purchasing decisions. In fact, Coastal asserted that it is highly unlikely that consumers of glasses and contact lenses relied to their detriment on the number of likes reported by Coastal. Thus, Coastal argued that any overstatement is de minimis and likely to have no impact on other consumers. According to the advertiser, the FTCs Endorsement Guidelines as applied to social media support this conclusion.12 The advertiser asserted that even if a Facebook like constitutes an endorsement, Coastal has not paid consumers to like the Coastal Facebook page. According to the advertiser, a consumer like of Coastal is not the equivalent of a product review by a blogger who has received a free product from an advertiser and does not contain any information which would deceive consumers. Rather, Coastal argued that a consumer may like Coastal on Facebook for many different reasons, including, but not limited to, the Free Glasses promotion. III. Discounted Pricing on Contact Lenses of 70% or More

The advertiser informed NAD that it revised the original discount pricing promotion for contact lenses of 70% or more to the industry standard of Up to 70%.
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Social Studies: Applying the FTCs Revised Endorsement Guides in New Marketing Media, available on the FTCs website at http://business.ftc.gov/documents/social-studies-applying-ftcs-revised-endorsement-guides-newmarketing-media.

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In support of the Up to 70% savings claim, the advertiser submitted a Price Comparison Chart. After receiving the challengers comments the advertiser acknowledged that the mathematical calculations used to arrive at the price comparisons shown in the Price Comparison Chart were inadvertently done incorrectly. The advertiser submitted a revised chart (Revised Price Comparison Chart) which the advertiser argued, demonstrates that some of Coastals prices are at least 70% less than the prices charged by local and national contact lens retailers, and, that Coastal offers substantial discounts on contact lenses compared to online retailers, as well as brick and mortar retailers.13 In response to the challengers argument that Coastal should have chosen the largest national retailers for its price comparison chart, the advertiser asserted that such a position is not supported by FTC or NAD guidelines. Rather, the advertiser stated that it properly chose to compare its prices to retailers in geographic areas where Coastal makes the majority of its sales. The advertiser further argued that the fact that the geographic locations it chose, such as New York or Seattle, may be expensive cities does not mean that price information from those cities is irrelevant or improper for making a price comparison. By way of example, the advertiser noted that New York City and Seattle are both within the top 10 geographic areas where Coastals customers reside or work. Because these cities represent the geographic locations of a large portion of Coastals customers, these prices are properly compared to Coastals prices. According to the advertiser, these customers are familiar with the prices of other retailers in their cities and thus it is the other retailers in their area that Coastal should compare its prices to not some retailer in Boise, Idaho. Finally, the advertiser noted that the Price Comparison Chart and Revised Price Comparison Chart also include national online and brick and mortar retailers who sell across the country such as Bestcontacts.com, LensCrafters and Cohen Fashion Optical. IV. Customer Endorsements Through The Use of Facebooks Like Button

Recognizing that virtually all retailers today rely heavily on social media to promote their brand and products, and, that many major retailers solicit Facebook likes with the promise of offers, rebates, give-a-ways and coupons, 1-800 Contacts alleges that Coastals likes are different because they were allegedly obtained improperly. The advertiser argued that I-800 Contacts gives all other retailers the benefit of the doubt that their promotions contained sufficient disclosures, even though the disclosures were not made available to customers until after liking the company. The advertiser asserted that, regardless of whether the qualifying information previously provided by Coastal was sufficient, two facts are essential: (1) the majority of retailers obtain their likes from consumers with the simple promise of offers without disclosing any qualifying information concerning those promotions; and (2) the majority of Coastals likes were the
The advertiser explained that this chart compares the standard price charged by Coastal for the top 10 contact lens products it sells to the price for those same products charged by both on-line and brick and mortar retailers with a high sales volume in the shown geographic area. The geographic areas selected are those from which Coastal has the largest customer following. For example, Texas, California and New York, represent Coastals top 3 markets.
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result of Coastal being on Facebook for three years. The advertiser emphasized that the freeglasses promotion has run for less than a year and only for limited times in limited geographic areas. During that same period, Coastal received many Facebook likes from consumers that never received the free-glasses promotion. In addition, the advertiser asserted that it is regular practice for companies on Facebook to list the number of likes they have without any qualification as to how they were obtained. Furthermore, the advertiser stated that it is impossible to determine the source of any one individual like. Thus, the advertiser argued that for the challenger to insist that Coastal discount all likes it has received since it began running the free glasses promotion is unreasonable and nothing more than an attempt to make up for its own failure to join the social media revolution sooner.

Decision: I. The Free Glasses Promotion

The offer of free merchandise is a promotional device frequently used to attract customers and is an undeniably a strong marketing tool.14 As NAD has noted in prior decisions regarding similar promotions, because the offer of free merchandise is so powerful, use of the word free carries a certain cache that should be reserved for those offers that are genuinely free.15 Although the advertiser modified the Free Glasses promotion, the original promotion was running at the commencement of this inquiry. For these reasons NAD reviewed both the original promotion and the revised promotion. A. The Original Free Glasses Promotion The original free glasses promotion stated: Like This Page! So you too can get your free pair of glasses! Although additional terms and conditions applied to this offer, this information was not available to consumer until after they entered the promotion by liking the advertisers Facebook page. Both FTC Guidance16 and NAD case precedent have long recognized that free claims must clearly and conspicuously disclose, at the outset of the offer, the material terms and conditions of the offer in close conjunction with the free merchandise claim.17
16 C.F.R. 251.1(a). See Time Warner Cable (Time Warner Cable Internet & High Definition Television Offerings), Case #5143, NAD/CARU Case Reports (February 2010). 16 The FTC Dot Com Disclosures Guide states that, [d]isclosures must be effectively communicated to consumers before they make a purchase or incur a financial obligation. Disclosures are more likely to be effective if they are provided in the context of the ad, when the consumer is considering the purchase. Where advertising and selling are combined on a Web site, disclosures should be provided before the consumer makes the decision to buy, say, before clicking on an order now button or a link that says add to shopping cart. 17 See Vitafree.com Inc., Case #3766, NAD/CARU Case Reports (May 2001).
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In this case, the terms and conditions of the promotion included significant limitations on the offer including: 1) the promotion applies to coupon eligible frames only; 2) the offer is limited to one per household; 3) the offer is valid for a specific time period or until a specific number of frames are given away; and 4) additional fees apply for lens upgrades, shipping and handling. NAD considers additional fees for shipping, handling and product upgrades, as well as limitations on the availability of the promotion,18 to be material terms that must be disclosed to consumers at the outset of a free promotional offer. Providing such terms and conditions only after a consumer has entered a promotion is not sufficient. NAD further noted that without clear disclosure of these material terms, the advertisers offer of free glasses, i.e., Like this page so you too can get your free pair of glasses, conveys the express message that all a consumer has to do is like the page, and they will receive a free pair of glasses a message that is not accurate. For these reasons, NAD recommended that, in the future, the advertiser provide a clear and conspicuous explanation of the addition terms and conditions at the outset of any promotional offer of free merchandise. B. The Modified Free Glasses Promotion After the commencement of this proceeding the advertiser voluntarily implemented some changes to the challenged Free Glasses promotion. While NAD appreciated the advertisers efforts to bring the challenged promotion into compliance with FTC Guidance and NAD precedent, NAD remained concerned about the sufficiency of the modifications. The modified promotion appears on the advertisers Facebook fan page under the Free Frames tab. The advertisement features a female wearing glasses and pointing to the like button on the advertisers fan page with the following text: Like us! (with more arrows pointing to the like button) And you can get FREE frames! *conditions apply. The asterisk leads to the following qualifying information in the form of a disclosure at the bottom of the webpage: Offer valid daily starting at 9:00 am EST or until 10,000 glasses have been given away per stated day. Standard 1.5 index lenses included. Lens upgrades, shipping and handling extra. Coupon eligible frames only. Valid for first time free glasses recipients only. Limit one per household. NAD noted that, depending on the size of the screen and the viewers screen settings, consumers may have to scroll down in order to read the disclosure. Below the disclosure are the most recent

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For example, a limit on the total number of giveaways available through the promotion, or, limitations on the merchandise available through the promotion.

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comments posted by consumers on the advertisers fan page, followed by a Terms & Conditions section as well as a FAQ section.19 The issue before NAD is whether the qualifying information is sufficiently clear and conspicuous to provide consumers with the material information they need in order to make an informed purchase decision. When evaluating the sufficiency of an advertisers qualifying information NAD considers the following points: 1) the placement of the disclosure in the advertisement and its proximity to the claim it qualifies; 2) the prominence of the disclosure; 3) whether items in other parts of the advertisement distract attention from the disclosure; and 4) whether the language of the disclosure is easy to read and understand, taking into consideration the advertisers intended audience. After a thorough review of the revised promotion, NAD determined that the limit on the total number of glasses that will be given away should appear in the main claim, and not, as part of the disclosure. In addition, to avoid the potential for conveying a false message that consumers participating in this promotion will pay nothing for a pair of glasses, NAD recommended that the advertiser note the approximate cost of shipping and handling immediately below or alongside the main claim. Finally, because the disclosure may not appear on the same screen as the main claim, NAD recommended that the advertiser enhance the *conditions apply notice as well as increase the font size of the remaining items in the disclosure. With these modifications, NAD was satisfied that the remaining terms of the offer (Standard 1.5 index lenses included. Lens upgrades extra. Coupon eligible frames only. Valid for first time free glasses recipients only. Limit one per household.) would be sufficiently noticeable, and, easy to understand. II. Customer Endorsements Through The Use of Facebooks Like Button The promotion at issue20 is referred to as a like-gated promotion21, a fairly new social media advertising tool22 that has already become a popular addition to many companies advertising campaigns. Like-gated promotions require consumers to like the subject Facebook fan page in order to gain access to the deal, coupon code, or savings noted in the advertisement.23 Once an
According to the challenger, the Terms & Conditions section and FAQ section did not appear on the Facebook page at the outset of this proceeding. 20 Both in its original and modified form. 21 The like feature is a social plug-in, which is a tool that other websites can use to provide people with personalized and social experiences. When individuals interact with social plugins, they share their experiences off Facebook with their friends on Facebook. Other social plugins include: 1) the Comment box which allows users to comment on another website using their Facebook account; 2) the Send button, where individuals click Send to share a link and optional note as a private Facebook message, Facebook Group post, or email; 3) the Activity Feed, which displays what an individuals friends are liking, commenting on, or sharing on a site; and 4) Recommendations, which represent the most liked content among an individuals friends on a site. Facebook.com, Promotions Guidelines, http://www.facebook.com/promotions_guidelines.php (last updated May 11, 2011). 22 The Facebook like feature launched in April 2010. 23 Although NAD is not responsible for ensuring that advertisers abide by publishers advertising policies, it is relevant to note that Facebook recently revised its Promotions Guidelines (Guidelines). These Guidelines govern communication about, and administration of, promotions on Facebook including: promoting, advertising or referencing a promotion in any way on Facebook as well as the operation of any element of the promotion, such as
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individual on Facebook likes a company fan page, they are considered a fan. The liked content or post (which may display the specific promotion or the company offering the promotion) will then appear on that individuals Facebook Wall as well as their Facebook Newsfeed for all of their friends to see. In addition, the personal icon of the individual who liked the content may be displayed on the connected Page, in advertisements about that Page, or in social plug-ins next to the content they liked. This type of social endorsement is valuable to companies for many reasons. On Facebook, these social endorsements increase visibility while promoting the company, product or service in the guise of a recommendation from a friend. In addition, NAD noted that, outside the context of the Facebook platform, the total number of likes a company, product or services Facebook page has received is used as a measure of the companys social presence which, in turn, speaks to the companys ability to engage consumers, enhance loyalty to the brand, broaden their customer base and of course, increase sales. The challenger in this proceeding argued that, by using a misleading like-gated promotion, Coastal has fraudulently increased its visibility on Facebook, and, its overall social presence. In order to remedy this unfair social gain, the challenger argued that Coastal should be required to remove all likes prompted by this promotion on its Facebook page, and, modify press releases targeted at the investment community, which emphasize Coastals social presence by referring to Coastals total number of fans. In response, the advertiser emphasized that it is regular practice for companies on Facebook to list the number of likes they have without any qualification as to how they were obtained. The advertiser further argued that, regardless of whether the qualifying information previously provided by Coastal was sufficient, two facts are essential: 1) the majority of retailers obtain their likes from consumers with the simple promise of offers without disclosing any qualifying information concerning those promotions; and 2) the majority of Coastals likes were the result of Coastal being on Facebook for three years.24 In addition, the advertiser emphasized that there is nothing stopping the consumers who liked the Coastal Facebook fan page from taking back their like. Finally, the advertiser asserted that it is impossible to determine the source of any one individual like.
collecting entries, conducting a drawing, judging entries, or notifying winners. The revised Guidelines make a distinction between using Facebook features as a mechanism for registering for or entering a promotion, and conditioning registration or entry on taking a particular Facebook action. In particular, Section 3 of the revised Guidelines prohibits promotion operators from using Facebook features or functionalities (such as liking a Page) as the actual means of entry for a promotion. Section 4 of the revised Guidelines, prohibits promotion operators from condition[ing] registration for or entry in a promotion on taking actions using Facebook features or functions, but provides an important exception: registration or entry may be conditioned on a user liking a Page, checking in to a Place, or connecting to [the promotion operators] app. Thus, liking a Page can serve as a requirement for participation in a promotion, but it cannot serve as the means by which a participant enters the promotion. Facebook.com, Promotions Guidelines, http://www.facebook.com/promotions_guidelines.php (last updated May 11, 2011). The advertiser emphasized that the free-glasses promotion has run for less than a year and only for limited times in limited geographic areas. During that same period, the Coastal Facebook page received many likes from consumers that never received the free-glasses promotion.
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The message conveyed by the disclosure of the number of likes obtained in whole or in part through a like-gated promotion represents a case of first impression for NAD. In this case, NAD considered what message, if any, is conveyed by the challenged Facebook likes displayed on the Coastal Facebook page, and, when referred to outside of the context of Facebook. A. Display of Likes on Facebook With respect to the display of the total number of likes on Coastals Facebook page NAD noted that likes are automatically displayed as part of the Facebook platform. In addition, NAD noted that Facebook users are aware of the fact that people like content for many reasons, one being to gain access to promotions, contests and sweepstakes offered through Facebook. NAD determined that the display of Facebook likes on a companys Facebook fan page can mean many things to consumers, including: 1) the general message that consumers like the company, the products or service; 2) the individual that liked the content entered a likegated promotion, contest, or sweepstake; or 3) that the individual simply wanted to share some piece of content on that companys page with their friends. The overall message conveyed by a Facebook like or the total number of likes on Facebook is one of general social endorsement. NAD next considered the challengers position that Coastal should be required to remove the Facebook likes it received as a result of the misleading promotion of free merchandise. NAD noted that although the advertised promotions at issue required modification, the evidence in the record does not demonstrate that consumers who participated in such promotions were denied a free pair of glasses because they failed to understand the additional terms and conditions of the offer (which were not originally provided). In addition, there is no evidence in the record demonstrating that Coastal obtained its likes through misleading or artificial means, for example, by paying a service to inflate the number of likes on Coastals Facebook page, or, by requiring Coastal employees to like the Coastal Facebook page without informing consumers that they work for Coastal. Therefore, so long as actual consumers liked the Coastal page, and those consumers who participated in the like-gated promotion received the benefit of the promotion, then Coastal does in fact have the general social endorsement that the likes convey. For these reasons, NAD did not recommend that the advertiser remove the likes it received as a result of its offer of free merchandise. Rather, NAD recommended that, in future offers of free merchandise, the advertiser follow NADs recommendations noted above.25 NAD noted for the record, however, that although NAD determined that, in the context of Facebook, likes are interpreted by Facebook users as general social endorsements, likes are
25

Specifically, that the advertiser: 1) state the total number of free glasses that will be given away in the main claim, and not, as part of the disclosure; 2) note the approximate cost of shipping and handling immediately below or alongside the main claim; and 3) enhance the *conditions apply notice and increase the font size of the remaining items in the disclosure.

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still valuable because they increase social visibility and should not be obtained through deceptive promotions. Thus, NAD cautioned that the outcome of this case would be quite different if the evidence in the record demonstrated that consumers who participated in the like-gated promotion could not or did not receive the benefit of the offer, or, that the advertiser used misleading or artificial means to inflate the number of Facebook likes. B. Reference to Likes Outside of Facebook In addition to the automatic display of the total number of likes on Coastals Facebook fan page, the challenger also challenged Coastals reference to its total number of likes in press releases targeted at the investment community and on its Investor Relations page of the Coastal Contacts website. The press release stated: Coastal Contacts Inc., the worlds largest online retailer of eyeglasses and contact lenses, became Facebooks largest vision care brand this week (May 9, 2011), hitting the 500,000 fans mark. Coastal Contacts Inc. has seen the number of Facebook fans of its family of international eyewear brands increase from just under 10,000 in August 2010 to 500,000 an increase of 5,000%. Facebook has become a vital business tool for companies looking to build their brand by actively engaging with consumers of their products and services often in real time. Roger Hardy, Founder and CEO of Coastal Contacts Inc., believes that his company has been able to grow its fan base significantly because the social media platform enhances Coastal Contacts Inc.s existing customer experience: Providing our customers with value, quality and speed is at the heart of our company and we pride ourselves on going above and beyond to offer the best customer care experience in the world. Facebook has allowed us to take these values even further so that we can respond to customer questions on our pages instantly any time of day or night Our customers appreciate the customer experience they receive and I think this is reflected in the huge number of customers who engage with us on Facebook, giving us one of the largest Facebook fan bases on the planet and the biggest in the optical industry. Our goal now is to exceed our customers expectations and achieve one million Facebook fans by the end of the year. In addition, the following press release appeared on the Investor Relations page of the Coastal website on September 23, 2011:

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Coastal Contacts Inc. (TSX:COA) (Stockholm:COA) the world's largest online retailer of eyeglasses and contact lenses announced today it has received the Vision Monday Lead, Follow or Get Out of the Way Award for the most Daring Social Media or Web Presence. This award is part of Vision Monday's 1st Annual Dispensing and Retail Excellence (D.A.R.E.) Awards. Based in New York, Vision Monday is the Ophthalmic Industry's Leading Source of News and News Analysis and is a division of Jobson Healthcare. We are pleased to receive this strong recognition from Vision Monday and to be part of the rapidly changing landscape in the optical industry, stated Roger Hardy, Coastal's Founder and CEO. With more than one million Facebook friends and having recently shipped our one millionth pair of eyeglasses, Coastal has become the leader in the online eyeglasses category. The momentum continues to build as we added more than 180,000 new eyeglasses customers in the most recent quarter alone. We look at our category and think there are many ways to improve. It lags in technological adoption for several reasons, but we are of the view that the category will accelerate its migration to use technology to better serve customers in ways that they want to be served over time. Technology is changing so fast, those who don't innovate will be left behind as so many old world retailers have already discovered. Innovation is a key part of our culture and it occurs at Coastal every day, all in the interest of better serving an increasing number of customers. As NAD has noted in previous cases, claims made in press releases which appear on an advertisers website constitute a form of advertising.26 Although the press releases mentioned above were directed at the investor community, and not at the general consumer, once posted on the advertisers website they function, in part, as advertising. During the review process NAD questioned why the Coastal Facebook page currently displays 459,229 likes or fans but the press releases noted above state that Coastal has 500,000 fans and more than one million Facebook friends. In response, the advertiser explained that Coastal Contacts Inc., is an international company with multiple locations and a variety of websites presented in different languages. The number of fans or friends reported in the press releases represents the total number of likes Coastal has received from all of the companys Facebook pages targeted to different countries all over the world. The advertiser further explained that, to the extent that the number of fans or likes is relevant to the investment community, it is only with respect to the entire company via its portfolio of web stores rather than how many fans or likes a particular website might have. While the advertiser provided NAD with a clear explanation for the basis for its claims to have 500,000 and one million Facebook fans or likes the basis for these claims was not
26

E.g.,Entertainment Career Connection, Inc. (Recording Connection & Film Connection Apprenticeship Programs), Case #5041, NAD/CARU Case Reports (July 2009); Brammo Motor Sports, LLC, (Enertia), Report #4828, NAD/CARU Case Reports (April 2008).

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communicated in the press releases. In order to avoid conveying the unsupported claim that Coastals U.S. Facebook page alone has obtained 500,000 or one million Facebook fans, NAD recommended that the advertiser clarify that such numbers are based on the total number of fans or likes the Company has received from all of its Facebook pages globally. III. Discounted Pricing Claims A. Save Over 70% At the outset of this proceeding the challenged advertisements made the following express savings claims: Save 70% and Get Fast, Free Shipping! Save over 70% on Contact Lenses and Save Over 70% Off Weekly Contacts. In an NAD proceeding, the advertiser has the initial burden of presenting a reasonable basis for its claims.27 As the challenger pointed out, the advertiser provided no evidence in support of the challenged savings claims of 70% and over 70%. For this reason, NAD noted its appreciation for the advertisers voluntary and permanent discontinuation of such claims, an action NAD deemed both necessary and proper. B. Save Up to 70% NAD next considered the advertisers modified savings claims, which state that consumers can save Up to 70% on Coastal contact lenses. When evaluating the truth and accuracy of Up to savings claims NAD considers whether the advertisers evidence demonstrates that: 1) the maximum level of savings claimed can be realized by an appreciable number of consumers under circumstances normally and expectably encountered by those consumers; 2) the number of sales at the maximum savings comprise a significant percentage of all items in the offering; and 3) the advertiser offers at least 10% of the inventory included in the offer at the maximum advertised savings.28 NAD did not consider the advertisers original Price Comparison Chart submitted in support of the Up to 70% claim because, as the advertiser acknowledged, the price comparisons shown in that chart were calculated incorrectly. NAD did, however, consider the advertisers Revised Price Comparison Chart which contains the correct calculations for the same products and

Carpet Express, Inc. (Carpet Cleaning Machine Rental), Case #4037, NAD/CARU Case Reports (May/June 2003); Thorne Research, Inc. (Encapsulated Nutritional Supplements), Case #3892, NAD/CARU Case Reports (March/April/May 2002). 28 See Bookrenter.com, Inc (Bookrenter.com), Case #5323, NAD/CARU Case Reports (April 2011); Priceline.com Incorporated (Hotel Pricing), Case #4073, NAD/CARU Case Reports (August 2003); CIMO, INC. d/b/a/ Hotwire (Hotwire Airline, Hotel and Car Rental Discount Pricing), Case #3946, NAD/CARU Case Reports (August 2002); Priceline.com (Savings on Airline Tickets), Case #3742, NAD/CARU Case Reports (March 2001); E-Campus.com Inc. (Online Textbook Sellers), Case #3689, NAD/CARU Case Reports (September 2000).

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retailers listed in the original Price Comparison Chart as well as the price comparisons for three additional products that did not appear in the original Price Comparison Chart.29 After a thorough review of the advertisers evidence, NAD noted that none of the products listed in the original Price Comparison Chart are offered by Coastal at a price that is 70% less than the retailers shown. The only products that are available at a 70% discount through Coastal Contacts (as compared to the ten retailers listed) are the three new products Coastal added to the Revised Price Comparison Chart. Specifically, Coastals price for the Soflens Daily Disposable 90 is 70% less expensive than Grand Central Optical and Cohens Fashion Optical, and, the Coastal price for Focus Dailies Toric 30 and Dailies Aquacomfort Plus 30 is 70% less than Cohens Fashion Opticals prices. NAD further noted that the advertiser provided no evidence demonstrating that the number of sales that provide a 70% savings comprise a significant percentage of all products sold by Coastal, or, that at least 10% of Coastals contact lens inventory is sold at the maximum advertised savings. Lastly, NAD noted that because the savings claims at issue appear on the advertisers website, consumers can reasonably expect the savings to be based on prices from competitors that represent a substantial portion of the national market. As the challenger pointed out, the majority of the retailers listed in the advertisers Price Comparison Chart and Revised Price Comparison Chart consist of retailers with small percentages of the national market share, retailers serving atypically expensive urban markets, and retailers with relatively few locations. For all of the above reasons, NAD determined that the advertisers evidence does not demonstrate that a substantial number of consumers can realize a 70% savings on contact lenses purchased through Coastal Contacts. Therefore, NAD recommended that the advertiser discontinue its use of the Up to 70% savings claims. IV. MSRP for Private Label Eyeglasses

At the outset of this proceeding the advertiser informed NAD that it voluntarily discontinued its use of a Manufacturers Suggested Retail Price (MSRP) for its private label brand glasses, an action NAD deemed both necessary and proper.
29

The original Price Comparison Chart compared Coastals prices to BestContacts.com, Clarkson Eyecare, LensCrafters, Contactlensescentre.com, GrandCentral Optical, Eye Care Associates of Texas, 20/20 Eye Care, Alamo Eye Care, Site for Sore Eyes and Cohens Fashion Optical for the following ten different contact lens products: 1 Day Acuvue Moist 30, 1 Day Acuvue Moist 90, Focus Dailies 90, Air Optix Aqua, Air Optix Aqua Night and Day, Acuvue 2, Acuvue Oasys for Astigmatism, Air Optix for Astigmatism, and Freshlook Colorblend. The Revised Price Comparison Chart compares Coastals prices for the same ten products using the same retailers but added a price comparison of three additional products: Soflens Daily Disposable 90, Focus Dailies Toric 30 and Dailies Aquacomfort Plus 30. The Coastal prices for the additional three products were not compared to the prices of all ten retailers, but rather, only for certain retailers. Specifically, the Coastal price comparison for the Soflens Daily Disposable 90 product is listed only for Grand Central Optical and Cohens Fashion Optical, and, the Coastal price comparison for Focus Dailies Toric 30 and Dailies Aquacomfort Plus 30 is only listed for Cohens Fashion Optical.

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NAD noted, however, that the discontinued MSRPs were replaced with a Suggested Retail Price (SRP) for several of the advertisers private label brand glasses. Like MSRPs, SRPs are meaningful to consumers because they provide consumers with the information they need in order to assess the total value of their savings on a particular purchase. In order to display a MSRP or SRP, advertisers must be able to demonstrate that the listed MSRP or SRP is the typical price charged. The advertiser submitted no evidence in support of its original MSRPs or SRPs. For these reasons, NAD recommended that in addition to discontinuing the use of an MSRP for its private label brand glasses, the advertiser also discontinue the use of SRPs for its private label brand glasses.

Conclusion: NAD determined that the advertisers original Free Glasses promotion failed to clearly and adequately disclose material information. Consequently, NAD recommended that, in the future, the advertiser refrain from advertising promotional offers of free merchandise that do not provide a clear and conspicuous explanation of the addition terms and conditions at the outset of the offer. With respect to the modified Free Glasses promotion, NAD determined that the limit on the total number of glasses that will be given away should appear in the main claim, and not, as part of the disclosure. In addition, to avoid conveying the unsupported message that consumers participating in this promotion will pay nothing for a pair of glasses, NAD recommended that the advertiser clearly disclose the cost of shipping and handling immediately below or alongside the main claim. Finally, because the disclosure may not appear on the same screen as the main claim, NAD recommended that the advertiser enhance the *conditions apply notice as well as increase the font size of the disclosure. With these modifications in mind, NAD was satisfied that the remaining terms of the offer would be noticed by consumers, and, easy to understand. NAD further determined that the display of the total number of likes on Coastals Facebook page conveys a general social endorsement. Because actual consumers liked the Coastal page, and those consumers who participated in the like-gated promotion received the benefit of the promotion, NAD determined that Coastal does in fact have the general social endorsement that the likes convey. With respect to the statements made in press releases to the investor community, NAD recommended that Coastal clarify that the number of Facebook fans or likes noted in the press releases is based on the total number of fans or likes the Company has received from all of its Facebook pages globally. NAD noted its appreciation for the advertisers voluntary discontinuation of the challenged savings claims of 70% and over 70%, an action NAD deemed both necessary and proper.

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With respect to the modified Up to 70% savings claim, NAD determined that the advertisers evidence does not demonstrate that a substantial number of consumers can typically expect to achieve a 70% savings on contact lenses purchased through Coastal Contacts. Therefore, NAD recommended that the advertiser also discontinue its use of the Up to 70% savings claims. Finally, NAD recommended that, in addition to discontinuing the use of an MSRP, the advertiser also discontinue the use of SRPs for its private label brand glasses.

Advertisers Statement: Coastal Contacts, Inc. values and supports the self-regulatory process and is pleased to have participated in the process. Coastal welcomes the NADs review of the use of Facebook likes in advertising, which is an issue of first impression, and its determination that Coastal does in fact have the general social endorsement that [its Facebook] likes convey. Further, while Coastal does not agree with all of the NADs recommendations, it will make appropriate adjustments to its advertising consistent with those recommendations. (#5387 KLF, closed 10/25/2011)

2011. Council of Better Business Bureaus, Inc.